University Mental Health Day – student council tax and refunds

04 March 2020

University Mental Health Day brings together the university community to make mental health a university-wide priority. This year, we’re looking into one factor that could cause unnecessary worry – student council tax. Alan Murdie, LL. B, Barrister, investigates a case in Durham where the council tried to charge a group of students for council tax and explains what you should do if the council owes you money.

If you’re a student, you shouldn’t be reading this. Afterall, full-time students are meant to be exempt from council tax. Aren’t they?

Unfortunately, this is not what is happening to some students in 2020.

You can see this in the case of four students who rented a house in Durham together last summer as their 2019/20 term-time accommodation. On returning to their studies in autumn 2019, they suddenly found themselves facing a bill for £281 from Durham Council for council tax.

Normally, homes occupied just by students are exempt. No less than three classes of student exemption have existed since 1992.

No council tax is payable if:

  • you’re a single full-time student who owns a home (Class L)
  • live in a student hall of residence (Class M)
  • share your home with other full-time students (Class N – ‘dwelling wholly occupied by students’)
  • in some cases, the spouses of overseas students may also be exempt.

For the ‘Durham Four’ university students, the council argued Class N exemption only applied when they were in their house during term-time. When absent in vacations, and staying with family, Durham council charged them council tax until their courses resumed.

Durham ignored the council tax rule that a full-time student is one studying 21 hours a week, 24 weeks of the year [the definition of student used]. The father of one student affected called the BBC Radio 4 Money Box programme.

Money Box broadcast – Saturday 22nd January 2020

I was contacted by Money Box for an opinion and took part in a broadcast that went out on Saturday 22 January 2020.

I emphasised how from its very inception; council tax had avoided making liable. There are good reasons for this. Firstly, students have lower incomes. Secondly, students may move around. And thirdly, – not officially admitted – students can be trouble. They are adept at thinking up with novel ways to avoid paying and making payment protests. Neither local or national government wanted any repeat of the pranks and high-jinks students played on councils during the short-lived ‘poll tax’ of 1990-1993.

When it came to the law, I told listeners the ‘Durham Four’ should appeal to the Valuation Tribunal for England, looking not just at the student exemption, but also at sole or main residence – the fundamental basis for anyone being taxed.

Section 2 of the Local Government Finance Act 1992

I was thinking specifically of this section as it holds council tax as a daily tax, which is payable each day in the year you have a home in one place (your sole or main residence).

The law is simple to state: ‘You are liable to pay the council tax on the home (wait for it) … where you actually live.’ This may seem obvious. However, as the court conceded, this is easy to state but not so simple given the infinite variety of circumstances and possible ways in which people can live.

Each case turns on its facts. Sole or main residence is not simply determined by time spent in one place, but by a myriad of factors e.g. where you are registered for voting, where you keep belongings, your postal address, utilities billing, relationships with other occupiers, the registered address for your GP etc ad infinitum.

In my view, the ‘Durham Four’ students could have claimed sole or main residence being at their parents during vacations. Alternatively, they might have been living in Durham, certainly if keeping their own belongings there, and returned occasionally and claimed their exemption.

What happened after the Money Box aired?

Interestingly, when Money Box programme got involved, Durham Council quickly dropped its claim. The council cancelled the bill and refunded the money.

It was a good job the Council did – saving the students a trek to the Valuation Tribunal.

Durham Council didn’t really explain their position. The fact they backed away when the media spotlight shone upon them, serves only to reduce one’s faith in the soundness of their judgements than increase it.

More importantly, liability for bills shouldn’t be determined your ability to call up the media. Public authorities should be getting it right at the outset.

Refunds – what if the council owes you money?

What if you’ve overpaid council tax? For example, you’re not awarded a 25% discount when you should, or moved away during the year?

Regulation 55 of the Council Tax (Administration & Enforcement) Regulations 1992 SI 613 holds you can sue the council in court. However, you can’t just rush to the court.

Firstly, you should contact the Council specifying why they owe you a refund and ask for it. Then the Council can:

  • I. agree to repay you
  • II. put a credit against a current or future year
  • III. refuse your repayment.

If your council refuses repayment, then you must appeal to the Valuation Tribunal. That was what the Court of Appeal decided in Lone v Hounslow [2019] EWCA 2206 on 17 December 2019.

Once you’ve won your appeal, you must then ask the Tribunal to make an order (called an ‘ancillary order’) telling the council to refund you.

An unfortunate aspect of this decision is having to go to the Valuation Tribunal to get your refund. You must begin an appeal to the Tribunal to get the money you are owed paid direct. The only exception may be if the council admits it owes you the money, but perversely refuses to pay it back in which case you might sue the council. Otherwise, you must go through the valuation tribunal system.

Somewhat optimistically, Lord Justice Arnold commented in Lone, “I would point out that this should not be a hardship for aggrieved taxpayers.” If only.

With respect, I doubt Lord Justice Arnold has had to try this himself. It is probably the longest winded way to claim a tax refund in the whole UK tax system!

Get in touch

If you’d like to discuss student council tax, or if you’re interested in becoming a guest blogger yourself, get in touch with the PayPlan Pro team.

Alan Murdie

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Alan Murdie


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